Archive for the ‘loans’ Category

The bad mortgages that got the current financial crisis started have produced a terrifying wave of home foreclosures. Unless the foreclosure surge eases, even the most extravagant federal stimulus spending won’t spur an economic recovery.

Business Week

The Obama Administration is expected within the next few weeks to announce an initiative of $50 billion or more to help strapped homeowners. But with 1 million residences having fallen into foreclosure since 2006, and an additional 5.9 million expected over the next four years, the Obama plan — whatever its details — can’t possibly do the job by itself. Lenders and investors will have to acknowledge huge losses and figure out how to keep recession-wracked borrowers making at least some monthly payments.

So far the industry hasn’t shown that kind of foresight. One reason foreclosures are so rampant is that banks and their advocates in Washington have delayed, diluted, and obstructed attempts to address the problem. Industry lobbyists are still at it today, working overtime to whittle down legislation backed by President Obama that would give bankruptcy courts the authority to shrink mortgage debt. Lobbyists say they will fight to restrict the types of loans the bankruptcy proposal covers and new powers granted to judges.

A foreclosure sign is posted in front of a townhouse in Herndon, Virginia. President Barack Obama’s quest to bridge Washington’s sharp political divides has been dealt another blow with the surprise exit of his commerce secretary pick, Republican Judd Gregg.(AFP/File/Paul J. Richards)

The Federal Reserve, gave a bleak outlook for the U.S. economy, saying that while it expected a “gradual recovery” to begin later this year, significant risks remain.

“Industrial production, housing starts, and employment have continued to decline steeply, as consumers and businesses have cut back spending,” the Fed said in the statement. “Furthermore, global demand appears to be slowing significantly.”

Fed Chairman Ben Bernanke and his colleagues are battling a three-headed economic monster: crises in housing, credit and financial markets that — taken together — haven’t been seen since the 1930s.

President Barack Obama‘s economic team is pushing to complete a bank-rescue plan that can be twinned with the $825 billion stimulus package being negotiated with Congress to alleviate the rapidly deepening financial crisis.

While full details of the rescue haven’t been settled yet, people familiar with the deliberations said the package is likely to include a $50 billion-plus program to stem foreclosures, fresh injections of capital into the banks and steps to deal with toxic assets clogging lenders’ balance sheets.

By Rich Miller and Robert Schmidt
Bloomberg

Officials “feel like they need to move quickly to provide some sense of calmness and assurance to the market that the government isn’t going to let this problem get out of hand,” said John Douglas, a partner at the Paul, Hastings, Janofsky & Walker law firm and a former general counsel at the Federal Deposit Insurance Corp.

In his inaugural address yesterday, Obama called for “bold and swift” action to resolve the crisis that’s cost the economy almost 2.6 million jobs last year, the most since 1945. Bank stocks sank yesterday, driving the Dow Jones Industrial Average to its worst-ever inauguration-day decline.

The president meets with his economic advisers today. One option that may be gaining ground: coupling the establishment of a so-called bad bank to buy some toxic assets with government guarantees to limit losses on those that remain on banks’ balance sheets.

President-electBarack Obama, relatively young and inexperienced, is facing a rapidly growing list of monumental challenges as he prepares to take the reins of a nation in turmoil.

“I do not underestimate the enormity of the task that lies ahead,” Obama said after his historic election a little more than a month ago.

It was a sobering assessment at the time, but the country’s problems have only worsened since then. Now, Obama sounds dire, particularly as he talks about the economy: “We’re in an emergency.”

He spoke during a week in which Congress killed a bailout of the failing auto industry, the government reported that jobless claims spiked to their highest levels in more than a quarter-century, and the Treasury Department said the nation registered a record federal budget deficit for November.

By LIZ SIDOTI, Associated Press Writer

President-elect Barack Obama gestures during a news conference in Chicago, Thursday, Dec. 11, 2008. Obama, relatively young and inexperienced, is facing a rapidly growing list of monumental challenges as he prepares to take the reins of a nation in turmoil.(AP Photo/Charles Dharapak)

With woes foreign and domestic on more fronts than even Franklin Delano Roosevelt encountered when he took office in the midst of the Great Depression, Obama will be sworn in as the country’s 44th president in January.

His leadership will be tested immediately and in many ways. His performance from the outset could well set the tone for his presidency.

Not only is Obama saddled with lingering wars in Iraq and Afghanistan that he is inheriting from President George W. Bush, but he also must deal with:

-a deepening recession in the U.S. and a spreading global economic crisis.

-an automotive industry on the brink of collapse and soaring national debt.

-increasing unemployment and its ripple effects.

-the threat of terrorism amid a historic transfer of power.

At the same time, Obama may be drawn into an unfolding political scandal over Illinois Gov. Rod Blagojevich‘s alleged efforts to trade the president-elect’s former Senate seat for personal gain. The ongoing federal investigation could ensnare some of his top advisers and taint the self-styled reformer who has tried to steer clear of notorious Chicago politics.

The president-elect says he’s “absolutely confident” his aides did not try to cut deals with Blagojevich, but at the very least, the scandal is a distraction for a leader facing the magnitude of problems on Obama’s plate.

Freedom of the press is often that key ingredient that separates the United States from less free and open regimes. Now we learn that Illinois Governor Rod Blagojevich was working feverishly to have Tribune writers fired in exchange for government breaks for the media giant….

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From Politico
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Politico’s been on top of the corruption allegations against Illinois Gov. Rod Blagojevich, who in a 78-page FBI complaint, requested “something real good,” a payoff, in return for his appointment of Barack Obama’s Senate seat.

But Blagojevich, along with chief of staff John Harris, also tried exerting their influence over the Tribune Company, pressuring executives to fire members of the Chicago Tribune’s editorial board, who were considered too critical of the Governor. Specifically, Blagojevich singled out deputy editorial page editor John P. McCormick.

In return, the state would make it easier for the cash-strapped Tribune Co. to obtain financial assistance from the Illinois Finance Authority, relating to the anticipated sale of the Chicago Cubs and Wrigley Field. Yesterday, Tribune Co. chairman and chief executive Sam Zell announced the company had filed for bankruptcy. The sale of the team and field is considered vital for keeping the media company going.

On Nov. 3, according to a complaint which includes intercepted phone calls, Blagojevich spoke to a deputy about how the Tribune will be “driving” the impeachment process against him. During the call, Blagojevich’s wife gets on the phone and tells the deputy to “to hold up that f—king Cubs s—t… f—k them.” Later, she said to “just fire” any critical writers at the Tribune.

It’s during the same call that Blagojevich said that they should pull together articles, and have Harris begin talking to the Tribune’s owners…

President-electBarack Obama announced support Sunday for a short-term government bailout of the nation’s carmakers that is tied to industry restructuring. He also accused auto executives of a persistent “head-in-the sand approach” to long-festering problems.

Obama said Congress was doing “the exact right thing” in drafting legislation that “holds the auto industry’s feet to the fire” at the same time it tries to prevent its demise.

In an appearance on NBC’s “Meet the Press” and later at a news conference, Obama at one point suggested some executives should lose their jobs.

By PHILIP ELLIOTT, Associated Press

One leading Democrat in Congress, Sen. Christopher Dodd of Connecticut, was far blunter. Rick Wagoner, the chief executive of General Motors Corp., “has to move on,” said Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee.

The criticism of industry leaders deepened as negotiators for the White House and Congress narrowed their differences over a plan to extend roughly $15 billion in short-term loans to any Detroit automaker that needs it. Analysts say General Motors Corp. and Chrysler LLC, in particular, are at risk for running out of money in the next few weeks, and that Ford Motor Co. may need help if the economy deteriorates further.

Democratic Sen. Carl Levin of Michigan, whose state is ground zero for the battered industry, said he was confident an agreement would emerge within the next day.